New Jersey Online Gaming Year in Review

Written By PlayNJ Staff on December 27, 2014

New Jersey is ending its first full year of regulated online gaming in a week. It has been a year that has fallen below most expectations, yet still generated revenue for several Atlantic City casinos.

Top Story of 2014 – Ultimate Gaming Fails

It seemed impossible to think that any company entering the New Jersey regulated online gaming market could fail. Unfortunately, that is what happened to Ultimate Gaming. Trump Taj Mahal was its land-based operator. Trump Entertainment, parent company of Trump Taj Mahal, entered bankruptcy protection in September. Ultimate Gaming announced two weeks later that it would leave the New Jersey market due to an outstanding balance of $1.5 million owed by Trump Entertainment.

Ultimate Gaming inflated its tournament prize pools with hundreds of thousands of dollars in overlays. Even with that investment, it never managed to capture more than a 3 percent market share in the poker segment. Its online casino performed at or near the bottom of the market participants for its entire existence.

The failure of Trump Entertainment may have made for a convenient excuse to leave New Jersey.  It could stop bleeding money in a market where its branding was not recognizable and performance fell well below expectations. Ultimate Poker failed in Nevada about six weeks later and the company ceased all operations.

The one positive out of this story is that it showed regulation works.  Ultimate Gaming players were paid in full with no hassle.

Betfair Closed New Jersey Poker Room

Betfair opened a New Jersey online poker room on November 21, 2013. It closed on December 1, 2014. It raked $140 during its entire life with $90 of that coming in its first 6 weeks. It raked just $1 in its last three months of action.

Betfair’s poker room may have been the biggest disappointment in New Jersey, but it cemented the fact that there is a limit to the number of viable poker sites a state can offer. In the case of New Jersey, that answer is three.  This fact will be considered in other states looking to create a new regulated online poker industry.

PokerStars Still on Sidelines

PokerStars was acquired by Amaya Gaming on August 1, 2014. This was thought to be a solution to the licensing issues PokerStars faced in New Jersey as Amaya Gaming was already an approved vendor.

That did not turn out to be the case. Licensing problems still seem to loom over PokerStars in the market. While there have been plenty of rumors as to what might be causing that – from outstanding legal issues of former PokerStars owners or politics – the New Jersey Division of Gaming Enforcement has been silent as to the official cause for the delay.

Woman Wins $1.3 Million at Online Slots

A New Jersey woman became the largest online casino winner in New Jersey in November. The lucky lady hit for $1.3 million on the Millionaire Genie slot at HarrahsCasino.com. This is a qualifying game for HarrahsCasino’s free spin promotion.  While it wiped a majority of Caesars Interactive’s casino revenue for the month, this was a positive development for the industry.  It created a positive buzz for online gaming through many mainstream media outlets.

Pala Interactive Gets Approved

A new company entered the New Jersey regulated gaming market in November. The move was controversial as management in Pala Interactive held similar roles with UltimateBet, an offshore poker site that was the site of a multi-year insider cheating scandal last decade. The Division of Gaming Enforcement recognized this issue and released a bulletin explaining the decision to license Pala Interactive.

Pala Interactive currently operates casino games. It has plans to launch online poker in 2015.

New Jersey Online Gaming Revenues Completely Miss Mark

New Jersey internet gaming revenues have fallen about 50 percent below even the most conservative projections.  This has added fuel to the fire for online gaming opponents that have attempted to use it as a reason to ban the activity.  It is clear that future estimates will take these numbers into account when projecting markets.  Meanwhile, it has left a small deficit in the New Jersey budget.

The decline can be attributed to a number of factors.  One issue is payment processing, which was not up to the task when online gaming launched in New Jersey in November 2013.  Geolocation also created problems when New Jersey internet gaming went live.  Most of those issues have since been resolved.

The biggest problem with the online poker segment is a lack of liquidity.  Intrastate poker is a difficult business plan.  A future compact with Nevada and Delaware may help increase revenue and bring it more in line with expectations.

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